InReview – Issue 40

Joel Bakan is professor of Law at University of British Columbia. He is a Rhodes scholar, has law degrees from Oxford, Harvard, and Dalhousie, and is co-creator of the documentary film, The Corporation.

As a lawyer, Bakan builds a step by step case that the ethical problems with corporations today are systemic. None of the scandals of the past five years should come as a surprise because corporations are bound by law to serve only their shareholders. “As a psychopathic creature, the corporation can neither recognize nor act on moral reasons to refrain from harming others,” he argues. After building the case that corporations must pay no heed to workers, communities, or the environment, he concludes, “No doubt the corporation is a formidable foe.” So what should be done to contain this foe?

Bakan argues that self-regulation won’t work, and that more stringent laws hold the only possibility for reform. He advocates public purpose corporations for some tasks, and expanded regulations for other areas where corporations continue to function. He details the objectives for such laws in the final chapter.

I find his arguments to be seriously flawed. For example, he states that the company leader has accountability to the shareholder to wisely steward “other people’s money.” This seems reasonable enough. But from this he concludes, “The law forbids any other motivation for their actions, whether to assist workers, improve the environment, or help consumers save money,” and hence, “Corporate social responsibility is thus illegal–at least when it is genuine.”

This kind of argument ignores the fact that much of a corporation’s work these days is rooted in thought, not muscles, and without a positive work environment not much work gets done! Further, you could ask how many would be inspired to start a business under the burden of regulation he proposes.

Yes, there is a lot broken about corporations today as evidenced by recent ethics scandals. Yet Bakan’s analysis and proposed fixes are also broken. I highly recommend this book for the insight if offers into the way some people view the issues. And he uses some excellent examples that should challenge anyone in business. But I have a hard time thinking that more laws and expansive regulation provide a viable path forward.

After reading this inspiring book, you’ll never look at Starbucks the same way again.

Behind the corporate image of a relentless machine churning out new locations around the world, is a simple vision for coffee and a warm and friendly place where the world’s best coffee and social friendship intermix. According to Shultz, this is what Starbucks has always been about, and still strives to be.

The book offers remarkable insight into this journey. It was significant for me, as I grew up with Starbucks — literally. I knew some of the first associates and I can tell you that what Shultz says about his passion and vision coming to life in Seattle is true.

While company history is interesting, the real story is the emotional reality Schultz discusses in detail. He talks about being overwhelmed to tears, about the rejection he faced while trying to get funding for his fledgling company, about those in opposition, and others who nearly took it all away. Further, he admits to the struggle with having a hand in everything and having to slowly let go as the company grew. You are reading about a real person, someone with working-class roots who came from a poor neighborhood in Brooklyn, not an image generated by corporate PR.

The value of people is evident here. Starbucks grew because it struck an emotional chord with people. Schultz knew that in order for the company to be successful he needed people who shared the values and believed in the vision. This is often spoken of and rarely practiced in the corporate world where systems, forecasts, processes and other such tools become the focus, and the simple fact that all results come through people gets lost. He speaks throughout the book of people who helped him, coached and mentored him, challenged him, and made Starbuck’s what it is. One quote in particular summarizes his views: “If people relate to the company they work for, if they form an emotional tie to it and buy into its dreams, they will pour their heart into making it better.”

Ethix is an online publication of the Center for Integrity in Business in the School of Business and Economics at Seattle Pacific University. Ethix provides illustrations of business ethics challenges through positive examples of best practices and exemplary leadership. More»